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LEASE MARKET REPORT

J A N UA R Y 2 017

EXECUTIVE SUMMARY

Leasing Plays a Major Role in 2016 Record New Car Sales

LEASE VOLUME

4.3 M 4M

3.2 M

3.6 M

2.6 M

2.5 M

2M

2.6 M 2.3 M 2M

1.4 M

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Key Takeaways

2016 LEASE VOLUME SETS RECORD Lease volume grew for the seventh consecutive year in 2016, achieving an alltime high of 4.3 million units. Over the past five years, lease volume has grown by 91% and has been a major catalyst in driving new vehicle sales in the U.S.

LEASING STIMULATING SUV SALES With SUV prices heftier than those for cars, leasing is a way for consumers to enter this popular segment in a more cost-efficient manner. This helped SUVs outsell passenger cars for the first time ever in 2016.

CONSUMERS ATTRACTED TO LOW PAYMENTS 2016 lease payments averaged $120 less than average finance payments. For large pickup trucks, which enjoy high residual values, lease payments averaged $206 less, representing the largest difference of all vehicle types.

MILLENNIALS PROPORTIONALLY LEASE THE MOST Though they account for only 12% of all leases in the U.S., millennials lease more than any other age group as a proportion of their overall sales. Nearly onethird of millennials who purchased a new vehicle in 2016 decided to lease.

LEASE MARKET REPORT

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LEASING GROWTH

Leasing Drives Sales to Record Levels

LEASE PERCENTAGE OF NEW VEHICLE SALES

35%

31% 30%

25%

20%

15%

10%

5%

0%

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

Leasing continues to grow as a percentage of new vehicle sales. In 2016, it increased to 31% (from 29% in 2015).

80% of Americans Finance at Their Dealership

SALES BY PURCHASE METHOD

CASH/INDEPENDENT FINANCE SALES

DEALER FINANCE SALES

LEASE SALES

60%

49%

50%

40%

31% 30%

20% 20%

10%

0%

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

The way consumers pay for their vehicles has completely changed over the past decade. Ten years ago, cash/independent finance was the most prevalent way people purchased a vehicle. That dropped from 41% in 2006 to 20% in 2016. In its wake, financing at the dealership (OEM/dealershipaffiliated bank) has increased along with leasing.

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LEASE MARKET REPORT

LEASING GROWTH BY VEHICLE TYPE

SUVs, Trucks Power Leasing Growth

LEASE VOLUME BY VEHICLE TYPE

CAR

SUV

TRUCK

2.5 M 2M

1.5 M

1M

.5 M

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

0M '16

Among the major vehicle segments, car lease volume is declining, which is in line with the greater market trend of declining sales. However, SUV sales climbed in 2016, outselling passenger cars for the first time ever. With that, we watched SUV lease volume grow to 1.9 million units and SUV lease penetration rate rise to 32%. Pickup trucks also experienced a lease volume boost. In 2016, 15% of trucks were leased, which grew from 14% year over year.

With gas prices low and fuel efficiency improved, consumers are flocking to pickups and SUVs. The downside is the cost as they are considerably more expensive than passenger cars. Leasing reduces this burden and has been an avenue for consumers to purchase pricier vehicles.

LEASE PENETRATION BY VEHICLE TYPE

35%

CAR

SUV

TRUCK

30%

25%

20%

15%

10%

5%

0%

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

LEASE MARKET REPORT

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LEASING GROWTH BY BRAND

Nearly All Brands See Leasing Bump

INFINITI BMW LEXUS AUDI

VOLK SWAGEN MERCEDES-BENZ

J AGUAR LAND ROVER

LINCOLN ACURA SMART

CADILLAC BUICK

PORSCHE VOLVO MINI

HYUNDAI MAZDA HONDA JEEP KIA GMC NISSAN

CHRYSLER FIAT

CHEVROLET TOYOTA SCION FORD RAM SUBARU DODGE

MITSUBISHI

63%

58%

55%

52%

51%

50%

48%

48%

48%

46%

45%

45%

42%

36%

36%

36%

33%

32%

31%

29%

29%

28%

27%

26%

26%

25%

24%

22% 21% 20%

2016 LEASE PENETRATION 2011 LEASE PENETRATION

20%

14%

7%

Every brand except Mitsubishi experienced more leasing over the past five years. The Japanese big brands -- particularly Honda and Nissan -- saw the least growth, as they historically lease many vehicles anyway. Significant growth has come from truck/SUV brands such as Ram, GMC and Land Rover as the market flocked to these vehicles.

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LEASE MARKET REPORT

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